Michigan Vehicle Sales Tax & Fees [+ Calculator]
It’s exciting to buy a new (or new for you) car, but it’s also far from cheap.
Things like sales tax and other fees are often forgotten about in the excitement of making a new car purchase. But in Michigan, you’ll need to be prepared to spend additional money on these extra costs.
Here’s what to expect when it comes to taxes and fees in the state of Michigan.
How Much Is the Car Sales Tax in Michigan?
The car sales tax in Michigan is 6%. Michigan is one of the few states that do not have any additional local or county tax. All tax rates in Michigan are at 6%.
As an example, if you were to purchase a new SUV at a purchase price of $25,000, then you will have to pay an additional $1,500 in sales tax.
How to Calculate Michigan Sales Tax on a Car
You can calculate the sales tax in Michigan by multiplying the final purchase price by .06.
For example, let’s say that you want to purchase a new car for $30,000, you would use the following formula to calculate the sales tax:
$30,000 x.06 = $1,800
This means that your sales tax is $1,800 on a $30,000 purchase price.
Calculate Car Sales Tax in Michigan Example:
- Initial Car Price: $30,000
- Sales Tax Rate: 6%
- Trade-In Amount: $5,000
- Dealer Rebate: $2,000
- Manufacturer Rebate: $3,000
Sales Tax = ($30,000 – $5,000 – $2,000) * .06
Sales Tax = $1,380
Remember that the total amount you pay for a car (out the door price) not only includes sales tax, but also registration, and dealership fees.
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Do I Have to Pay Sales Tax on a Used Car?
The sales tax is the same 6% on a used vehicle.
For example, if you were to purchase a used car for $15,000, then you will have to pay an additional $900 in sales tax.
Which County Has the Highest Tax? Which Has the Lowest?
Michigan is one of the few states that does not have any local or county sales tax, therefore all counties have the same tax rate of 6%.
Car Sales Tax for Trade-Ins in Michigan
You don’t have to pay sales tax on trade-ins in Michigan. In other words, be sure to subtract the trade-in amount from the car price before calculating sales tax.
As an example, let’s say you are purchasing a new SUV for $25,000 and your trade-in is worth $5,000. You will subtract the trade-in value by the purchase price and get $20,000. Therefore, your car sales tax will be based on the $20,000 amount.
Michigan caps the trade-in credit, but the cap rises $1,000 every January 1. For 2026 it is $12,000. So if you trade in a car worth $15,000, you deduct $12,000 from the purchase price when working out sales tax, not the full $15,000.
It started at $5,000 in 2019 and climbs to $13,000 in 2027 and $14,000 in 2028. From 2029 the cap disappears entirely and the whole trade-in value counts. If you are trading in something valuable and the timing is flexible, waiting until January is worth $1,000 of extra credit, which is $60 of tax.
Car Sales Tax on Private Sales in Michigan
A sales tax is required on all private vehicle sales in Michigan.
As an example, if you purchase a truck from a private party for $10,000, then you will pay 6% of that amount to the Michigan DMV.
Tax on Rebates & Dealer Incentives
You do not have to pay tax on dealer rebates in Michigan. In other words, be sure to subtract the dealer rebate amount from the car price before calculating sales tax.
As an example, if you are purchasing a new car for $30,000 with a $5,000 rebate, you will pay sales tax on the $25,000 cost of the car.
However, the same does not apply to manufacturer rebates in Michigan. You must pay tax on manufacturer rebates, or in other words, do not subtract the manufacturer rebate amount from the car price when calculating sales tax.
Michigan DMV/State Fees
There are some other state and DMV fees associated with the purchase of a vehicle in Michigan.
A few of these fees include:
- Registration Fee: based on the vehicle’s original MSRP, not a flat rate. It drops 10% in year two and another 10% in year three, then stays level.
- Title Fee: $15
- Plate Transfer Fee: $10
- Electric Vehicle Surcharge: $267 a year for a battery electric vehicle, and $113 for a plug-in hybrid, from January 1, 2026. Both are charged on top of the ordinary MSRP-based registration fee
Michigan Dealership Fees
Dealerships apply extra fees, sometimes referred to as “doc fees,” with the sale of the car.
Though these fees vary based on the dealership, the average fee in Michigan is $165, with a limit of $230 or 5% of the purchase price on how much dealerships can charge.
When Sales Tax Is Exempt in Michigan
There are a few scenarios where sales tax is exempt:
- Vehicle is titled in the name of a federal credit union
- Out-of-state dealers buying a vehicle from a Michigan dealer
- When a dealer titles a demo car
- If you are a foreign diplomat
- Transferring the vehicle to a relative (excludes aunt, uncle, cousins, nieces, nephews, and former spouses)
Michigan EV Rebates & Incentives
There is no EV rebate in the state of Michigan. Proposals for a $2,000 rebate have been floated repeatedly and none has become law, so do not budget for one.
Michigan went the other way in January 2026. Under a road funding deal, the annual surcharge on a battery electric vehicle rose to $267 and on a plug-in hybrid to $113, increases of roughly $100 and $50. That is currently the steepest EV registration charge in the country. The amounts are tied to the state fuel tax, rising $5 for an EV and $2.50 for a hybrid for every cent the gas tax goes above 19 cents, so expect them to keep climbing.
There is no federal help either. The federal EV tax credit ended on September 30, 2025, so a Michigan buyer today faces the $267 annual surcharge with no offsetting credit from either level of government.
Tax information and rates are subject to change, please be sure to verify with your local DMV.
